Donald Trump once observed that firing people on national television has made him more popular. In the family business, firing a family member may not make you more popular, but if everyone knows that a particular family member needs to go, actually letting them go may provide a significant amount of clarity and emotional relief while serving as a catalyst for improved organizational morale and performance.
Of course, firing a family member may also have some negative consequences like creating turmoil within family relationships or causing reconsideration of your supervisory structure, which is not fun in an industry that seems chronically short of help. At the end of the day you have to weigh the pros and cons of doing what many of those outside the family business say won't be done: asking a family member to leave.
In helping family businesses work through tough situations over the years, and in my own leadership and supervisory roles, I've observed three beliefs that must be present in order to ask someone to leave.
First, you have to believe that no one is irreplaceable. Many times leaders in business are seemingly held hostage by an employee or family member who does one thing really well, but who treats people terribly or causes all kinds of other problems. The leader is afraid that the business can't survive without that particular family member's strength. The reality, however, is that every business gets through the personnel change. Sometimes it takes a lot of creativity and it means a short-term increase in the workload, but the feeling of relief and improvement in morale causes remaining employees and family members to rally.
Second, you have to believe that asking a family member to leave will create a better situation for both you and them. By the time an employment situation reaches firing proportions, just about everyone is unhappy. Recognizing that a change will ultimately be better for all parties is necessary, even if the family member who is asked to leave doesn't think so in the short run. Many people who were rightly fired say that months or years later it's what needed to happen.
Third, you have to believe that the damage to family relationships in the current situation will be equal to, if not greater than, the damage caused by asking someone to leave. A big reason people won't let a family member go is the fear of damage to family relationships. After all, you will still have family reasons to interact with your brother, sister, son or daughter and those situations will be very stressful if you've asked them to leave.
But you have to consider the stress of your current situation: Your frustration is probably leading to a level of resentment toward that family member that will likely do significant damage to your relationship if you don't ask them to leave. If you let the family member stay in the business to "keep the family peace," family peace will only be surface-deep. The level of anger, resentment and frustration will be difficult to hide. (I often see stress develop between the leader of the business and his or her spouse due to "bottling up" the frustration with a family member that needs to go.) In short, damage is being done whether the family member stays or goes; relationships will be scarred whether or not they leave. You have to believe that the damage will be the same or greater if they stay.
If you arrive at a decision to ask a family member to leave, I recommend several actions. First, make sure that you have communicated your frustration to the family member over a period of time. If you are in a leadership position in the business but have not been clear about your expectations or frustrations, you owe it to your family member to make sure they have a chance to understand and meet your standards. And if they are falling short, they deserve to know where they stand with you. Asking someone to leave should not be a surprise when it happens, it should be the result of an ongoing conversation in which it becomes clear that things are not working in their current form.
Second, keep the final conversation short, determined and respectful. If you've made the decision to let a family member go, having a drawn out conversation during the termination has the strong likelihood of going south and creating more relationship damage. If they tell you they will change their behavior, tell them they can reapply at some point in the future. In other words, once you've made the decision, have the conversation and stick to your resolve.
Finally, consider a severance package that helps your family member get back on their feet. One of the benefits of a family business is that the business can help the family, and since being fired is usually somewhat of a traumatic experience, you have the flexibility to craft a package -- usually a paycheck and benefits for a few months -- that helps the family member make the transition.
One complicating factor is that the family member might have ownership in one or several entities, and you will likely need to go through a process of unwinding that ownership after the family member leaves. My suggestion is to give it a few weeks before digging into the process, after emotions have a chance to subside. Hopefully you have a buy-sell agreement that spells out how someone exits from ownership. If not, ask your accountant to meet with you (together or separately) to understand the process and negotiation of unwinding.
Asking an employee to leave is not easy, but it comes with business leadership. Asking a family member to leave is undoubtedly one of the most difficult tasks you will face in a family business. However, if your goal is to create a long-lasting family enterprise, you have to make the decisions that improve the business and that set the stage for better family relationships. Letting someone go is sometimes a part of that process.